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24 Jan 2014

LPG Cooking Fuel: A Quantum Leap in Service to the Customers

India’s tryst with Liquefied Petroleum Gas (LPG) began in 1955, when the then Burma Shell started marketing LPG in Mumbai. LPG has over the last 6 decades become the most popular kitchen fuel. The expansion story can be written in 2 parts with 1980 as the watershed year. Prior to 1978, marketing of LPG was restricted to the extent of product availability from indigenous sources.

Large scale expansion of LPG marketing was undertaken from 1980 with the increase in product availability due to expansion of refineries and setting-up of extraction units. As the popularity of LPG increased, its demand rapidly outstripped the indigenous availability necessitating large scale imports.

In the early years, LPG marketing was restricted to only urban areas. Subsequently, penetration of LPG was slowly expanded to semi-urban and rural areas as well.

Today, LPG in India has reached over 15 crore (15.43 crore as on 1-7-2013) households, which roughly translates to more than 60% of the population. Few would have ever imagined that with its humble beginnings in 1955, and considerable reservations regarding its acceptability, LPG would go on to acquire this popularity one day.

A Clean & Green Fuel

A comparison between the smoke-riddled, hot and blackened kitchens of the past and ultra-modern sleek kitchens today using LPG would be sufficient proof of the clean, friendly and convenient nature of LPG compared to other fuels like coal, wood, or cow-dung cakes.

In view of its obvious benefits, the Government decided to provide subsidized LPG for cooking, so that more and more kitchens would be persuaded to adopt this fuel and turn safe and hygienic.

Today, India is the fifth largest consumer of LPG in the world after USA, China, Saudi Arabia and Japan. However, with almost 90% of its LPG consumption in the domestic Sector, India is the third largest consumer of domestic LPG after USA and China. A mind-boggling about 3 Million LP Gas Cylinders are home-delivered every day (i.e. 900 million/year) to cater to the 15 crore households in the country.

Expanding Network & Reach to the Hinterland

The rapidly growing popularity of LPG threw up the concomitant logistic issues – the need for developing a nationwide supply chain, maintaining an un-interrupted supply chain, shouldering the mounting subsidy bill and endeavoring to minimize mal-practices It is to the credit of the Government and its Public Sector Oil Marketing Companies (OMCs), viz. Indian Oil Corporation Ltd, Bharat Petroleum Ltd & Hindustan Petroleum Ltd. that a huge network comprising 12,791 LPG distributorships and 186 LPG bottling plants have been set up across the length and breadth of the country, including most inhospitable terrain like Leh and Andaman & Nicobar Islands. These are serviced by the 22 Indian refineries providing an uninterrupted supply of LPG.

The Government has plans to expand the infrastructure, particularly setting up more LPG bottling plants in the rural and semi-urban areas to ensure the reach of LPG in the hinterland.

Until recently, the PSUs marketed LPG only in towns and cities with a minimum population of 20,000. However, the Rajiv Gandhi Grameen LPG VitranYojna started in 2009, has ensured the reach of LPG to the smaller towns and villages. Out of the total 6619 LPG distributorships advertised under this scheme, around 2200 have already been commissioned, thereby ensuring the reach of this safe, reliable and convenient fuel in these rural markets.

In addition to ensuring the reach of LPG to the rural areas, the Scheme has pro-poor features including release of LPG connection to BPL families with funding of security deposit from CSR funds of OMCs, allotment of distributorship to the local (Panchayat) domiciles, women empowerment through mandatory partnership of spouse, etc. The success of the Scheme can be appreciated from the fact that 38.8 Lakh LPG customers including 1.42 Lakh BPL families have been enrolled through these distributorships as on July 1, 2013.

Customer Convenience – First & Foremost

The Government is constantly striving at reaching LPG to the customers’ doorstep as well as ensuring the highest service standards. With this twin objective in mind a number of novel initiatives have been introduced including the rating of distributors based on the time taken for delivery and making their performance available online on the LPG Transparency Portals of the PSUs. This would ensure that barring supply bottlenecks beyond human control, LPG cylinders should be made available to customers as quickly as possible.

The Government has also introduced connection portability on a pilot basis in Chandigarh which empowers customers to change distributors online, in the event she/ he isnot satisfied with the service. Portability would be rolled out in a phased manner.

With the development of mobile applications for booking & tracking of cylinder refills, technology has been successfully harnessed to increase the customer convenience quotient. A single toll-free complaint number(18002333555) is now operational across PSUs to provide grievance redressal. Consumers can now also rate their dealers on the company portal/transparency portal.

Direct Transfer of Subsidies - Delivery of subsidised LPG to the intended beneficiaries has always been a cherished goal of the Government but plugging leaks in the system has been a herculean task. The enormity of the issue can be assessed by the amount of subsidy given by the Government to keep kitchen fuel bills under control over the years. The subsidy bill on account of domestic LPG in 2012-13 alone has been Rs. 41,547 crore.

In order to ensure that subsidies reach the targeted segment, Government has introduced the Direct Benefit Transfer for LPG (DBTL), whereby the subsidy on LPG cylinders for domestic usage, currently around Rs. 465/- per cylinder, is being directly transferred to bank accounts of the beneficiaries. This scheme has been rolled out on a pilot basis on June 1, 2013, in 18 districts, on July 1, 2013 in Mysore and on August 1, 2013 in Mandi across 8 States and 2 UTs which have a high Aadhaar penetration. Going by the results so far, DBTL Scheme has been a great success with over 4 million transactions carried out and over Rs.150 crore cash transferred directly to accounts of LPG customers in these 20 districts as on date.

The scheme will be extended to another 35 districts on September 1, 2013, after which it will be extended pan-India in a phased manner.

Transparency Portal

To educate customer online for various aspects of sales & distribution of LPG transparency portal was launched on June 22, 2012. The portal is a major step in the direction of bringing transparency in supply of subsidized LPG as it provides all related vital information. The customers and distributors are now more vigilant about receipt and delivery of LPG cylinders. This information sharing has proved to be a powerful social audit mechanism also.

With the new initiatives, LPG would reach to far-off corners of India to make cooking a more convenient experience. The expansion drive alongwith measures for providing transparent and better consumer services will go a long way in improving the quality of life including in rural and remote areas.